MORESCO Corporation
MORESCO Group delivers sustainable one-of-a-kind products

The 66th 3Q Financial Report(From March 1, 2023 to November 30, 2023)

Tokyo Stock Exchange Standard Market 5018 (Petroleum and Coal Products)
January 19, 2024

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Business Environment- Volume of automobile production
Changes in automobile production volume in regions of our sites
10,000 units(% compared toprevious year)

3,972

3,970
3,607
3,247

4,290

1,963

20/3Q
JapanChina(+5%)

820(+8%)656761

19/3Q

690

2,106

590

674

21/3Q

22/3Q

23/3QUnited States

Southeast/South Asia

( +7%)( +14%)

Source: Prepared by MORESCO based on data released by MarkLines Co., Ltd.
Note 1: Data is aggregated based on MORESCO’s fiscal year (Japan: March to August, overseas: January to June).
Note 2: Data for Southeast/South Asia includes only Thailand, Indonesia, and India, where we have operating sites.

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Business Environment- Raw material prices and Exchange rates$/bDubai crude oil price¥/$

Exchange rate

150120145.611010086.59080140130120110701006050904080

307020-3Q

21-3Q

22-3Q

23-3Q

Domestic naphtha price

1,000 yen/kL

80

6460

402020-3Q

21-3Q

22-3Q

23-3Q
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Consolidated Income Statement(Million yen)

22/3Q

23/3Q

Year-on-yearchangeNet sales

22,47923,731+5.6%

Gross profit

6,188

6,623+7.0%

5,677

5,572-1.8%

511

1,050

+105.5%

633

649

+2.5%

Ordinary profit

1,144

1,699

+48.5%

Profit before tax

-250-

719

1,335+85.7%

SG&A
Operating profit
Non-operating
profit (loss)

Profit** Profit attributable to owners of parent, the same hereafter

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Net sales by Business Segment

22/3Q

23/3Q

Year-on-yearchangeFunctional Fluids

11,081

11,965+8.0%

Hot Melt Adhesive

5,801

6,419+10.7%

Synthetic Lubricants

1,381

957

-30.7%

Liquid Paraffin &Sulfonates

2,849

2,993+5.1%

Other

1,367

1,397+2.1%

22,47923,731+5.1%(Million yen)

Total net sales

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Functional Fluids[Net sales] Up 8.0% year on year (¥11,965 million)[Sales volume] Down 11.2% year on year
Million yen

3,764➢ Japan
Shipments of DC fluids increased as
automobile production resumed operations.
2,716

3,3532,461➢ China
Shipments decreased due to the decline inoperating rates of Japanese automobiles.

2,253

1,484

1,434826 828

712627829

Vacuum Hydraulic DC fluids Cutting
oil
fluid
fluidsForging
oil

Other

22/3Q

➢ Southeast/South Asia, North America
Shipments increased due to an increase in
the number of automobiles produced.

23/3Q
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Hot Melt Adhesive[Net sales] Up 10.7% year on year (¥6,419million)[Sales volume] Up 4.2% year on year
Million yen

4,629
4,132

➢ JapanSales for hygiene applications steadily
increased.

729

Hygiene applications

767

Adhesive

22/3Q

940

1,023

➢ Overseas
Sales expansion for hygiene applications
progressed in India and Indonesia.

Other

23/3Q
7
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Liquid Paraffin & Sulfonates[Net sales] Up 5.1% year on year (¥2,993 million)[Sales volume] Down 5.8% year on year
Million yen

2,200
2,068

➢ Liquid Paraffin
Sales of polystyrene plasticizer products
have been on a recovery trend since theprevious fiscal year.

592➢ Sulfonates
Shipments decreased due to inventory
adjustments at auto parts
manufacturers.

576
188

Liquid Paraffin

Sulfonates

22/3Q

217

Other

23/3Q
8
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Synthetic Lubricants[Net sales] Down 30.7% year on year (¥957 million)[Sales volume] Down 21.2% year on year
Million yen817➢ Hard disk surface lubricant
Sales decreased due to a decline in data
center investment.

774527145
37

High temperaturelubricating oils

HD lubricants

22/3Q

38
Other

23/3Q
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Trends in Net sales and Gross profit margin➢ The decline in gross profit margin has slowed down.
Million yen
9,000

Net sales

8,345

7,957

Gross profit margin

60.0%

7,049

6,620
6,000

40.0%
34.4%
31.6%

29.1%

27.0%
3,000

20.0%

00.0%

3Q

FY2020

4Q

1Q

2Q

3Q

FY2021

4Q

1Q

2Q

3Q

FY2022

4Q

1Q

2Q

3Q

FY2023
10

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Sales and Operating profit trends by segment
Million yenJapan
837
545
161

ChinaOperatingprofit

North America
15,295
14,629327
205
Sales to externalcustomers

160

101

13,843
21/3Q

22/3Q

615

22/3Q

762

872

Southeast/South Asia

2,532

21/3Q
21/3Q

112

23/3Q

2,813
2,612

78

23/3Q

22/3Q

23/3Q

230
102

3,345

21/3Q

86

4,274

22/3Q

5,031

23/3Q

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11

FY2023 Earnings Forecast➢ Assumptions for full-year forecast
Crude oil price: 90 dollars/b Exchange rate: 130 dollars/yen(Million yen)

23/3Q

Full-year forecast

Progress rate

Net sales

23,731

34,50068.8%

Operating profit

1,050

1,40075.0%

Ordinary profit

1,699

1,600

106.2%

Profit

1,335

700

81.3%

➢ Dividend per share
20 yen for interim, 25 yen estimated for year-end (includingcommemorative dividend of 5 yen)12
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Recording of Extraordinary loss
➢ Due to the conversion of Wuxi MoreTex Technology Co., Ltd. into a wholly
owned subsidiary (in October 2023), an extraordinary profit (285 million yen)was recorded as a gain on negative goodwill.
◼ Our business restructuring in China
October 2023

Our company has made Wuxi MoreTex Technology Co.,
Ltd. a wholly owned subsidiary.
(50% → 100%)

June 2024(planned)

MORESCO (ZHEJIANG) FUNCTION MATERIAL CO.,LTD. will be the surviving company and will be mergedwith Wuxi MoreTex Technology Co., Ltd. andMORESCO HANANO DIE-CASTING COATING(SHANGHAI) CO., LTD.

◼ Regarding gain on negative goodwill
Million yen

Negativegoodwill
285

Net assets*

Valuation of
Investments incapital ofsubsidiaries
Additional stockacquisition
amount* Net assets include a loss of 34 million yen related to step acquisition.

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Initiatives for health management
Excellent Health and Productivity Management Organization(Large Enterprise Category)
Certified for 3 consecutive years*A system to honor corporations that practice particularly excellent healthmanagement (Ministry of Economy, Trade and Industry)

Health management declaration
MORESCO believes that the physical and mental health of its
employees is essential for the sustainable development of theStructure
The officer responsible for healthmanagement(The President and RepresentativeDirector)

company. We will promote the health of our employees in orderto realize "a company where each and every person

grows up in a rich environment and creates newvalue."

The Director of Human
Resources

Industrial physician

Human Resources
Department

Health insurance
association

Public Relations
Department

14
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Head Office and R&D Center

Kobe City

Kobe Airport➢ Performance outlook and other information related to future forecasts and strategies contained in this material isbased on the Company’s decisions at the time of preparation of this material and is subject to change in the future
without prior notice.
➢ The Company will not be held responsible for any damage caused by making investment decisions based solely on
the performance outlook and target figures provided in this material.
➢ Please note, copying or distributing this material without permission is prohibited.

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